The increase in rental values in Central London area will continue for a while until supply begins to match demand, experts predict. During the severely recessive trend, developers were inclined to mothball new projects, leading to fewer number of available office spaces now. This is a major factor in causing a scramble for grade A offices even at rents which are higher than those prevailing just a few months ago.

During Q4 of 2009, 2.6 m sq ft of offices were rented out. This is a huge improvement over the past two years since the last peak in 2007. Property consultants Cushman & Wakefield have said that several new deals have been finalised over the last three months, taking up much of the available desk space in the market now. This shortage of good spaces is hiking up rents.

Prices of property are going up owing to increased demand from foreign investors and heightened sales activity. With banks selling their real estate holdings, the rise in prices may soon be curbed if interest is increased, experts predict. However, developers will continue to find real estate an attractive investment option as rents have now begun to stabilise. Central desk space London rents are now around £43 per sq ft while West End rental values are £75 per sq ft.

Although developers are resuming work on new projects, the current number of developments under construction is still way below that which was seen a year ago. Tenants fear that desired property may not be available, and are pushing up rents in their haste to get the best options. Given this, it is being predicted that rents will continue to rise even though other aspects of real estate may not fare as well.